The relationship between India and Australia is swiftly gaining in strength and offers immense potential for businesses in both countries, asserts Kumar R Parakala

What is the current status of the trade relationship between India and Australia?

Trade between India and Australia is increasing. However, the trade balance is currently tipped in Australia's favour. Australia is India's eighth largest source of principal imports. It however ranks number 32 in terms of exports. Australia's major merchandise exports to India in 2007 were A$9,288 million, whereas India's exports to Australia in 2007 totalled $1,459 million. Trade in services is quite buoyant, with Australia exporting A$2,062 million to India and importing A$459million. Australia's major service export is for education-related travel. India's major export to Australia is personal travel and computer and information services. Clearly, if our two countries are to enjoy a more equitable trade relationship, there needs to be more balance.

What does India offer Australia?

Kumar R Parakala
Global COO, KPMG

Clearly, India is an attractive destination for Australian organisations. They are increasingly looking at global service delivery models, as well as supplementing their resources to meet their growing business needs. I would expect to see more partial off-shoring into India by Australian companies; getting people from India to work on large projects, and increased activity in regard to Australian firms working with Indian IT multinationals to help them to support their operations in Australia and overseas. There are really exciting opportunities in the ICT field, where Indian companies excel.

What does Australia offer India?

Despite the recent rise in the value of the Australian dollar, Australia is still competitive on price when compared to companies in the UK and Europe. Australia has a reputation for providing high quality work, a good safety record and has experience in executing large projects overseas, especially in the infrastructure sector. Australian and Indian companies already partner in the ICT sector. Australia excels in Financial Services and has a very good contribution to make in terms of experience and expertise to India's financial services. Education is one of the biggest exports Australia offers India, in addition to commodities; close to 52,000 Indian students are in Australia right now; one of the highest student populations in the country.

What challenges do both countries face?

I think businesses in both countries need to gain a greater cultural understanding of the other. Many businesses rush to enter an emerging market and may get discouraged due to lack of progress if they don't understand the local environment. Conversely, some of the challenges in India, such as infrastructure and corporate governance, do need to improve.

How do you feel about the future relationship?

From a macro point of view, there is a need for transforming the Indo-Australian relationship at a greater level. Both countries are currently exploring a Free Trade Agreement. It is the right time for Australia to make India a key trading ally and explore various ways of building the bond in terms of trade, education and culture.